T-Mobile on AT&T Next: You're paying twice for that phone

T-Mobile CEO John Legere bashes AT&T's Next upgrade plan, calling it "smoke and mirrors" where customers pay more and get less.

T-Mobile CEO John Legere touting its Jump plan. AT&T Next was announced Tuesday in response. Sarah Tew/CNET

The claws are out now.

T-Mobile CEO John Legere fired back at AT&T's new early upgrade plan, calling it "smoke and mirrors" and a "poor copycat," and warned that customers pay more and end up getting less than what T-Mobile's Jump plan has to offer.

"Their offer is terrible for consumers," Legere told CNET in an email on Tuesday.

Earlier Tuesday, AT&T introduced its AT&T Next plan, which lets people pay for their mobile devices in 20 monthly installments and allows them to upgrade each year. But the new plan doesn't include a key component -- a lower-cost service plan -- which T-Mobile said is its crucial standout feature in Jump, its early upgrade plan. As a result, T-Mobile claims AT&T Next is actually more expensive than ever.

"They're charging you twice on the same phone and calling that a good deal," T-Mobile executive Andrew Sherrard told CNET in an interview earlier today.

In addition to paying the full price of the phone over the monthly installments, AT&T Next customers also pay the same service plan rate they had been paying -- a rate that was designed to work with subsidized phones. When T-Mobile introduced its no-contract monthly installment plan, it cut the rate of its plan to reflect the lack of a subsidy.

"Why they think anyone would go for this plan is baffling to us," Legere said.

An AT&T representative told CNET that Next represents a new offer and different choice for customers.

"We're not taking away anything," he said. "We're just giving people choice by removing the up-front cost and allowing them to upgrade their phone."

AT&T wouldn't discuss the direct comparisons between Next and Jump, but noted that it offers a larger 4G LTE network.

"As people dig into this, they'll find it's a much better deal to go with Jump," T-Mobile's Sherrard said. He added that Jump includes insurance, which AT&T Next does not.

Verizon Wireless is expected to introduce a similar plan to that of AT&T, and Sherrard said he felt equally good about how Jump stacks up against the reported Verizon Edge plan.

Sherrard said he was happy that the industry was reacting to T-Mobile's moves. He called the competitors' moves "a response, not a strategy."

Sherrard said that as the challenger in the industry with the lowest market share among the big four U.S. carriers, T-Mobile can afford to be more aggressive to pursue growth. The big two companies can't follow because they have higher profit margins to protect.

"We're glad to change the game a little bit," he said.

Updated at 11:44 a.m. and 1:47 p.m. PT: to include a comment from AT&T and from the T-Mobile CEO.

 

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